Tony Knowles on Tax Reform

2004 former Democratic Challenger for Senate (AK; previously served as Governor)

Supports new $50M annual cruise ship tourism tax

Thirteen days after the next governor takes the oath of office, Alaska will enact sweeping new rules and taxes on the tourism industry. Just a few months ago, Alaska voters put cruise lines and their passengers on the hook for millions in new taxes and
fees, all contained in a cruise-ship ballot proposition approved in August’s primary election.

Sarah Palin now says she doesn’t feel comfortable with some aspects of the new law. She recently told tourism industry officials that if elected, she would
work with them to “mitigate some of the impacts” of the law.

The new taxes and fees will generate at least $50 million a year in additional state revenue, according to recent estimates from the Alaska Department of Revenue. For the first time, the
state also will put observers on cruise ships visiting Alaska to monitor the ships’ smokestack and wastewater emissions. And cruise lines will need to begin disclosing their sales commissions with on-shore vendors.

Oppose the $143 billion corporate tax bill as a tax giveaway

MURKOWSKI: Murkowski also asked Knowles if he would have voted against the corporate tax bill, which she called the “jobs” bill, even with the gas line incentives.

KNOWLES: Knowles said the gas line provisions were noncontroversial
and were merely “parked” on the bill because it would become law. “That doesn’t address the merits of the jobs bill,” Knowles said. “It’s a $143 billion tax giveaway. That is a bill that, yes, I would not have supported.”

Source: AK Senate Debate, Fairbanks Daily News-Miner
Oct 20, 2004

Offer a tax credit for the industry to build a gas pipeline

KNOWLES: Knowles counts the proposed natural gas pipeline among Murkowski’s failures because he said he believes the recently approved federal incentive package didn’t go far enough. The government needs to offer a tax credit that kicks in at low prices,
he said. “Without that provision, industry leaders and other participants say it’s going to be very difficult to collect the $20 billion necessary to provide the right kind of economic environment. I will continue to pursue that.”

MURKOWSKI:
“We got over $700 million worth of tax credits to whoever is going to build this line. If you don’t think that’s an incentive that gets people to look at the project, you need to look again.” Another provision offers an 80 percent loan guarantee from
the federal government. Other language streamlines permitting and judicial reviews. “We made it happen and it’s news that all Alaskans should be celebrating,” she said. “It’s real results; it’s not just talking about it.”

Support permanent tax cuts for most wage earners

Q. Is it appropriate to continue cutting taxes in the face of the nation’s growing deficit?

KNOWLES: The best way to fix our budget problems is to create jobs. I support permanent tax cuts for most wage earners but would roll back cuts for the top 1%
who average $1 million a year or more. This would generate $194.5 billion that should be invested in infrastructure, health care for seniors, children and veterans, and education.

MURKOWSKI: Federal tax cuts are a means to spur economic growth. I firmly believe individuals know how to better spend their money than the government does.
This means more private investment instead of inefficient government-run programs. In the long run, that leads to greater prosperity and a reduced deficit for the nation as a whole.

Support tax cuts for lower and middle-class

Knowles supports tax cuts for lower- and middle-class that will get the economy moving. He supports tax incentives for businesses that rebuild infrastructure and create jobs that stay in Alaska and the US. He strongly opposes tax holidays for companies
that export jobs to other countries and the extremely wealthy that have cost the country trillions in lost revenue while burdening working families of this and future generations. He believes in tax fairness and that tax cuts benefit work and not wealth.

Source: Campaign website, TonyKnowles.com
Jun 30, 2004

No national sales tax or VAT.

Knowles adopted the National Governors Association policy:

State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.

National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.

Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.

Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.

Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.

Let states independently determine estate taxes.

Knowles adopted a letter to Congressional leaders from 37 Governors:

We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.

Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.

At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.

We urge the leaders to respect those rights and to restore fairness.

Source: National Governor's Association letter to Congress 01-NGA19 on May 23, 2001